L. What is the ending balance in Finished Goods ? (Show T-Account ) M. Assuming that the company closes its underapplied or overapplied overhead to Cost of Goods Sold, what is the adjusted cost of goods sold for the year? N. What is the gross margin for the year ? O. What is the net operating income for the year ?
L. What is the ending balance in Finished Goods ? (Show T-Account )
M. Assuming that the company closes its underapplied or overapplied
N. What is the gross margin for the year ?
O. What is the net operating income for the year ?
![Part 1.
Rhiner Corporation is a manufacturer that uses job-order costing. On January 1, the
company's inventory balances were as follows:
Raw materials
Work in process
Finished goods
$42,000
$20,000
$36,000
The company applies overhead cost to jobs on the basis of direct labor-hours. For the
current year, the company's predetermined overhead rate of $16.50 per direct labor-
hour was based on a cost formula that estimated $660,000 of total manufacturing
overhead for an estimated activity level of 40,000 direct labor-hours. The following
transactions were recorded for the year:
Raw materials were purchased on account, $520,000.
Raw materials used in production, $465,000. All of the raw materials were used
as direct materials.
The following costs were accrued for employee services: direct labor, $605,000,
indirect labor, $150,000, selling and administrative salaries, $240,000.
Incurred various selling and administrative expenses (e.g., advertising, sales
travel costs, and finished goods warehousing), $357.000.
• Incurred various manufacturing overhead costs (e g., depreciation, insurance,
and utilities), $505,000.
• Manufacturing overhead cost was applied to production. The company actuallV.
worked 42,000 direct labor-hours on all jobs during the year.
Jobs costing $1,685,000 to manufacture according to their job cost sheets were
completed during the year.
Jobs were sold on account to customers during the year for a total of $2,750,000.
The jobs cost $1,695,000 to manufacture according to their job cost sheets.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fffb2a5ed-e2cb-46b4-8ca3-e3b469f44323%2F8ad44a64-5df9-4552-a025-ccbad3f0427f%2F9ige37q_processed.jpeg&w=3840&q=75)
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Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts for you. To get the remaining sub-part solved please repost the complete question and mention the sub-parts to be solved.
Steps in the Job Order Costing Process:
In job order costing systems, the following steps are involved to arrive at the cost for a specific job.
1. Identification of the job, each job can be specified with job number or job name or even known as the customer name.
2. Tracing of the direct costs of the job will include Direct Material and Direct Labor.
3. Identifying the indirect costs and charge them to Manufacturing Overhead Account. This will include, indirect material, indirect labor, factory overhead, etc.
4. Apply indirect costs to the job using the predetermined overhead rate.
5. Transfering the work-in-process for the goods produced to the Finished Goods Account.
6. Accounting for the sales made during the accounting period, along with the charging of the cost of goods sold account.
7. Finding the total cost by adding all the costs.
8. Closing the under or overapplied manufacturing overheads to either the cost of goods sold or the income statement.
9. Calculating the revenue and then the profit, by preparing the income statement.
With the help of these steps, we will account for the transactions, and calculate the requirement as follows
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